Last night I was at a Board of Directors meeting of our local BMW MOA club. Our dealer attends regularly, as he supports us in almost everything we do. Great guy. I know, I know. We are lucky, but I am sure not alone even though we mostly hear bad stuff here.

Anyway, I learned something that may partially explain why BMW is losing so many motorcycle dealerships in the US. This is almost impossible to believe, but hang in there and I will explain.

BMW NA, does periodic audits on warranty work done at dealerships. This week, my local dealership has been undergoing his first audit since owning the fanchise. His description of the process is amazing.

The fact that BMW NA does audits is just good business, but the way they go about it may explain why so many of us have sour relationships with our dealers and why there are more leaving than joining.

First off, the process is adversarial in nature. The auditor assumes you are a crooked dealer and goes about claiming fraud with draconian corrective actions. They can only go back over warranty claims for the last 12 months. They go through the claims in detal and retroactively deny claims for any reason. Here are some examples:

New bike owner comes in with a battery going bad. He had to jump start his bike to get it started. The battery would not hold a charge. He brought it to the dealership 3 times where the techs checked out the charging system, charged the battery and turned him loose. On the fourth time he came in with the battery problem, the dealership gave him a new battery under the warranty program. The auditor says there are no bad batteries, just owners not taking care of them properly. The are denying all warranty claims in the audit year on batteries. We are talking $1000's of dollars out of the dealers pocket here.

Another example: The auditor wants to see a printed report out of the diagnostic computer on all warranty claims. Seems reasonable, but the BMW mandated computer which the dealer pays BMW $450/mo for does not make printouts. BMW has known this for sometime and has not fixed it. None-the-less, no printout, denied warranty work. Cha Ching.

Last example, but many more:

Auditor finds a discrepancy of 6 minutes on the time stamp and work order. The entire warranty claim denied, not just 6 minutes the entire $900 warranty claim.

You ask, can the dealer appeal. Yes. To the auditor. There is no one in BMW who is designated as a neutral appeal processor. The on site auditor is judge, prosecutor and jury. End of discussion. The very definition of arrogant.

There is so much more I learned about how BMW NA treats its dealerships. It amazes me the the USA has as many cycle dealerships that we have. It sure is making me reconsider what brand my next bike will be.

Hey, Rich - is the dealer you're referring to a single marque dealer, or multi?? I've had discussions with a coupla dealers on this same topic in the past, and they were both inclined to express the fact that the *other* marque was nearly a must-have necessity, in order to provide some semblance of balance to the bottom line.

Dealer has other marques, but BMW is a substantial contributor to his bottomline. I talked with him today and he is thinking of suing. If he can get some other dealers to join him, it would be a class action sort of thing. Here is another example.

Audit shows the warranty worked performed was done in 5 units and the book says it takes 6 units to do the work. The dealer charged BMW for the 6 units. The auditor denied the entire claim, parts and labor. The fact that the most of the time the book units are under the time it usually takes to do the warranty work makes no difference. To me that is just plain stealing from the people they need most in these difficult times. I bet we lose 1/3 of the dealers in this economy.

Most enlightened companies try to partner with their dealers. Seems like BMW is still at war.

I am a BMW Motorcycle Dealer Principle. I have been through a warranty audit. It was a completely fair process and very typical automotive dealership process.
The warranty system is cumbersome for a small dealership and I understand how it can be considered a burden but when you sign up to be a dealer you are given purse strings but with that comes the responsiblity to know and follow the rules.

Randy,
glad it was good for you. My hunch is you are in a minority. Some of the things noted above were purely arbitrary, like the battery thing. Guess it comes down to a dealer decides whether it is worth the time or not to pursue legal action.

My other hunch is that if BMW cycles is only a small part of your business (you have ATV's, Snowmobiles and other bike brands), they don't have as much to gain as they would at a dealership where BMW cycle is a big part of their business.

Randy,
glad it was good for you. My hunch is you are in a minority. Some of the things noted above were purely arbitrary, like the battery thing. Guess it comes down to a dealer decides whether it is worth the time or not to pursue legal action.

My other hunch is that if BMW cycles is only a small part of your business (you have ATV's, Snowmobiles and other bike brands), they don't have as much to gain as they would at a dealership where BMW cycle is a big part of their business.

Ultra LT

We have been a top 5 dealer for over ten years (number 1 more than once) BMW Motorcycles are most of our business.

Like Randy mentioned. We all know the rules and guidelines. The issue for smaller dealers is keeping up with the paperwork to back up warranty claims

I am a BMW Motorcycle Dealer Principle. I have been through a warranty audit. It was a completely fair process and very typical automotive dealership process.
The warranty system is cumbersome for a small dealership and I understand how it can be considered a burden but when you sign up to be a dealer you are given purse strings but with that comes the responsiblity to know and follow the rules.

I have an intimate relationship with a dealer in my area and would back you up on your characterization of the process. I have also specifically discussed the warranty process with some of the dealers who have supported us at CCRs. None of the dealers characterized the process as draconian or unfair, but were quite clear that poor record keeping could prove expensive.

I own a business that provides warranty support for 21 brands of consumer electronics, many of which have their own auditing procedures. The audit could prove quite expensive if we failed to follow their rules. The rules are arbitrary, but we are made completely aware of them when we sign the contracts.

This is the same process that car dealers go thru on a regular basis.
Look at it this way: The manufacturer gives the dealer an open checkbook. He complete a warranty repair, enters the information and gets paid overnight in most cases. That is as long as the computer likes the numbers he enters. Once the part numbers and labor codes satisfy the system he gets paid.

There is very limited on-line auditing, parts testing, and requests for documentation.

The manufacturers all have software that analyzes expenses for particular repairs and if a dealer is above national average by a certain percentage for a certain time, guess what? The Auditors show up. They look at documentation that is as much as 12 month old. All they can do is to reconstruct what happened based on the documentation presented by the dealer. The bottom line: If you are not following proper repair procedures and not documenting everything as required in the warranty terms and condition, you are going to be debited. As far as the non-printing test equipment and similar issues, all they need to do is to document on the repair order that the equipment is down and manually record all available data and the claim gets paid.

If the technician has a 20 minute time punch on a ticket and the dealership claims a 1 hour operation code the dealer will be debited. None of that is new or unique to BMW. The dealer that is lamenting the audit needs to tighten up his internal controls and do constant reviews of closed warranty RO's himself to make sure he can keep his money in future.

Having said all this, some auditors get jaded and debit everything that is even the least bit suspect. The appeal process normally takes care of that.

PS: I am a veteran of several large scale audits by BMW (same auditing process on the car side) and other manufacturers. All operate in the same manner. You an either gripe about it or get your house in order.

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